Nicholas Roberts/Bloomberg News(NEW YORK) -- A federal judge in New York has struck down a settlement agreement between one of the nation's biggest banks and government regulators.

Under a deal reached with the Securities and Exchange Commission, Citigroup would pay $285 million to settle claims it misled customers about an investment tied to mortgages.

Judge Jed Rakoff was upset that the deal did not require Citigroup to admit that it did anything wrong. He said the settlement "is neither fair, nor reasonable, nor adequate, nor in the public interest." Rakoff said the deal may be good for Citigroup, but gives nothing to the government other than a quick headline and leaves defrauded investors "substantially short-changed."